Moviepass has now gone low and I am not talking about just the stock. Moviepass is now – probably way too late – following a classic disruption strategy of entering a market on the low end.
In past posts, I wrote about how Moviepass was attempting to come in on the low end of the market as a disruptive new service, but stupidly they were offering full price premium fair at a disruptive low price. That strategy bombed badly. Buying $15 tickets and selling them for $5 is not just a bad strategy, it turned out to be plain stupid. All the while Ted and Mitch were promising that over time people would start to watch fewer movies and the ancillary revenue would make up the difference. None of that was well tested by this supposed data-centric company, even when both CEO’s claimed they had data to prove their case. They didn’t, they were both lying, and admitted tacitly later that they did not realize how popular the service would be, and had only expected 100 thousand customers to take the deal, not the millions who did. I guess that is what happens when you basically give away free money.
Now Moviepass is definitely coming in on the low end of the market. They are offering a service that is definitely not a premium movie going experience. In fact, for many, you almost can’t even find a movie to go see. The service is cheap relatively speaking, at $9.95 a month it still pays off in most markets if you can see a single film a month. It’s not always easy to do, but generally, you can find at least one off beat film a month to see. It’s not exactly an exciting value proposition, but you can get some small value from the service if you put in the effort.
This new strategy could help Moviepass survive. Gone are the days of Moviepass generously buying tickets for the masses to the big blockbuster films. But if Moviepass can hang on to enough subscribers to help small indie films goose their numbers, a small low-end niche service may be born. This strategy of connecting Moviebuffs to smaller run lesser known films could have been the initial disruptive service Mitch envisioned but simply executed horribly. Coming in on the low end might have attracted filmgoers who are interested in supporting smaller indie films and had an interest in seeing more indies at a better price. Eventually, this could have progressed to include more and more films, and working with creative companies to partner and promote films to the Moviepass subscriber base could have created a win-win partnership with indies who struggle to find audiences and money to create new films.
Moviepass could have slowly taken more and more of this market without drawing the ire of the establishment. Instead, Moviepass stuck their neck and middle finger out, and summarily got slapped down by the establishment.
It’s probably too late for Moviepass to execute this new low-end disruptive strategy. They have done so much damage to the brand, it will be almost impossible for them to build trust with a new type of audience willing to accept Moviepass as a niche service. Theaters have essentially given up on Moviepass, as Moviepass is no longer a significant contributor to ticket sales. Large studios could care less about Moviepass, they never believed in it anyway.
The only shot Moviepass really has now is to find a way to really excite indie filmmakers and try and find a way to hold on to enough subs so they can create meaningful partnerships that help deliver bigger audiences to smaller films. If they can pull that off, there’s a slim chance Moviepass could hold on.
Moviepass Films is a bet that Moviepass can make this happen. It’s a risky bet, as picking films that work is a portfolio like game, finding breakout films that help fund the turds has proven to be a difficult and low margin business throughout the years. There’s no good reason to believe Mitch and Ted will have great success here, and so far they are batting a big fat zero on their portfolio choices. Gotti being the extreme example, but let’s be real, none of the films so far have done anything interesting in the box office, and the current slate looks bad or very risky for returning investment.
It’s a looong road from where Moviepass has been to where they might be going. But maybe a small glimmer, a faint light of hope is on the horizon.